IVN.TO · 2019-10-17 12:00:00

Palladium prices hit an all-time high of US$1,781 an ounce, propelling Ivanhoe’s Platreef Project ‘metals-price basket’ to a new, multi-year high Mine development progressing at Ivanhoe’s Tier One palladium- platinum-nickel-copper-gold-rhodium mine development project

Mine Development & Operations

October 17, 2019

Palladium prices hit an all-time high of US$1,781 an ounce,

propelling Ivanhoe’s Platreef Project ‘metals-price basket’

to a new, multi-year high

Mine development progressing at Ivanhoe’s Tier One palladium-

platinum-nickel-copper-gold-rhodium mine development project

in South Africa

MOKOPANE, SOUTH AFRICA – Ivanhoe Mines’ (TSX: IVN; OTCQX: IVPAF) Co-Chairmen

Robert Friedland and Yufeng “Miles” Sun announced today that the spot price of

palladium has reached another all-time high of US$1,781 an ounce.

Recent increases in the price of palladium, nickel, rhodium and gold has resulted in the

weighted price of the ‘basket’ of metals contained in the ore at the Platreef palladium-

platinum-rhodium-nickel-copper-gold project to rise to a new, multi-year high.

Figure 1. Revenue per tonne of ore at the Platreef Project has risen steadily since 2016

(shown in US dollars)

$50

$100

$150

$200

$250

Jan-16

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Oct-16

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Apr-17

Jul-17

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Platreef Revenue Per Tonne of Probable Reserves (US$/t ore)

Platinum Palladium Rhodium Gold Copper Nickel

Total Cash Cost (Mine Site + Realization)

Mine Site Cash Cost

LT Street Consensus (October 2019)

Figure 2. Revenue per tonne of ore at the Platreef Project has risen steadily since 2016

(shown in South African rand).

Source for figures 1 & 2: Bloomberg. Based on historical weekly commodity prices at the end of each week.

Notes for Figures 1 and 2:

1. Based on Platreef Mineral Reserves with an effective date of May 24, 2017.

2. Probable Mineral Reserve of 124.7 million tonnes at a grade of 1.95 grams per tonne (g/t) platinum, 2.01

g/t palladium, 0.30 g/t gold, 0.14 g/t rhodium, 0.34% nickel and 0.17% copper.

3. A declining NSR cut-off of $155 per tonne (t) to $80/t was used for the Mineral Reserve estimates.

4. The NSR cut-off is an elevated cut-off above the marginal economic cut-off.

5. Metal prices used in the Mineral Reserve estimate: US$1,600 per ounce (oz) platinum, US$815/oz

palladium, US$1,300/oz gold, US$1,500/oz rhodium, US$8.90 per pound (lb) nickel and US$3.00/lb

copper.

6. Metal prices used in the DFS economic analysis: US$1,250/oz platinum, US$825/oz palladium,

US$1,300/oz gold, US$1,000/oz rhodium, US$7.60/lb nickel and US$3.00/lb copper.

7. Tonnage and grade estimates include dilution and mining recovery allowances.

8. Applies life-of-mine average recoveries of 87.4% for platinum, 86.9% for palladium, 78.6% for gold, 80.5%

for rhodium, 87.9% for copper and 71.9% for nickel.

9. Total cash cost includes mine site costs, plus realization costs such as treatment and refining charges,

royalties and transportation.

10. LT Street Consensus is based on a survey of brokers’ long-term metal prices estimates and includes:

US$1,000/oz platinum, US$1,150/oz palladium, US$1,350/oz gold, US$1,820/oz rhodium, US$7.08/lb

nickel and US$3.00/lb copper.

Palladium, nickel and rhodium have been three of the best performing metals in 2019.

The platinum-to-palladium ratio at Platreef is approximately 1:1, and Platreef has

remarkably high concentrations of nickel and copper. At current prices, palladium and

nickel comprise more than 60% of the weighted price of the ‘basket’ of metals in

Platreef’s ore. Rhodium and gold also add significant contributions to Platreef’s

contained metal valuation.

500

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Platreef Revenue Per Tonne of Probable Reserves (ZAR/t ore)

Platinum Palladium Rhodium Gold Copper Nickel

Total Cash Cost (Mine Site + Realization)

Mine Site Cash Cost

LT Street Consensus (October 2019)

“While many investors are focused on gold, palladium has been far and away the best

performing precious metal for the past several years. The strong, upward price

appreciation since 2016 of the collective basket of metals to be produced by Platreef

when commercial operations commence at the Tier One discovery is encouraging,” said

Mr. Friedland.

“Platreef is a massive, high-grade, long-life deposit that will produce a suite of vital

metals, many of which are essential to sustain our urbanizing planet. The nickel and

copper by-products are essential in the electric car revolution, and platinum and

palladium are equally vital for hydrogen fuel cell technology and catalytic converters to

clean the air.”

“Given recent transactions in the platinum-group-metals market, we are exploring a

number of options that can help us unlock Platreef’s incredible value for the benefit of all

of Ivanhoe’s stakeholders.”

Platreef’s flat-lying mineralized zones are up to 90 metres thick, at a 1 g/t 3PE+Au cut-off,

with platinum-group-metals grades that are as high, or higher, than many of the narrow-

veined PGM mines on South Africa’s eastern and western limbs. Platreef also has large

quantities of nickel, copper and gold, which are expected to establish Platreef as the

lowest-cost PGM producer in Africa.

Based on independent analysis prepared in the 2017 definitive feasibility study (DFS),

Platreef is projected to have a cash cost of US$351 per ounce of 3PE+Au, net of nickel

and copper by-products, and including sustaining capital costs. The DFS estimated that

Platreef’s initial, average annual production rate will be approximately 219,000 ounces of

palladium, 214,000 ounces of platinum, 30,000 ounces of gold and 14,000 ounces of

rhodium (combined 477,000 ounces of 3PE+Au), plus 21 million pounds of nickel and 13

million pounds of copper.

The mineral resources used as the basis of the DFS were those amenable to

underground selective mining. Information on Platreef Project geology and

mineralization is contained in the Platreef Project National Instrument (NI) 43-101

Technical Report dated September 4, 2017, filed on SEDAR at www.sedar.com and on the

Ivanhoe Mines website at www.ivanhoemines.com.

As detailed in Table 1 below, Platreef’s Indicated Mineral Resources contain an estimated

26.8 million ounces of palladium, 25.6 million ounces of platinum, 4.5 million ounces of

gold, and 1.8 million ounces of rhodium (a combined 58.7 million ounces of PGMs plus

gold), plus 4.1 billion pounds of nickel and 2.1 billion pounds of copper, at a cut-off grade

of 1 gram per tonne.

Platreef’s Inferred Mineral Resources contain an additional 43.0 million ounces of

palladium, 40.4 million ounces of platinum, 7.8 million ounces of gold, and 3.1 million

ounces of rhodium (a combined 94.3 million ounces PGMs plus gold), plus 7.7 billion

pounds of nickel and 4.1 billion pounds of copper, also at a cut-off grade of 1 gram per

tonne.

Table 1. Platreef’s Mineral Resources amenable to underground selective mining

methods (base case is highlighted).

Indicated Mineral Resources

Tonnage and Grades

Cut-off

3PE+Au

Mt Pt

(g/t)

3PE+Au

(g/t)

(%)

3 g/t 204 2.11 2.11 0.34 0.14 4.7 0.18 0.35

2 g/t 346 1.68 1.70 0.28 0.11 3.77 0.16 0.32

1 g/t 716 1.11 1.16 0.19 0.08 2.55 0.13 0.26

Indicated Mineral Resources

Contained Metal

Cut-off

3PE+Au

(Moz)

3PE+Au

(Moz)

(Mlb)

3 g/t 13.9 13.9 2.2 0.9 30.9 800 1,597

2 g/t 18.7 18.9 3.1 1.2 41.9 1,226 2,438

1 g/t 25.6 26.8 4.5 1.8 58.8 2,076 4,108

Inferred Mineral Resources

Tonnage and Grades

Cut-off

3PE+Au Mt Pt

(g/t)

3PE+Au

(g/t)

(%)

3 g/t 225 1.91 1.93 0.32 0.13 4.29 0.17 0.35

2 g/t 506 1.42 1.46 0.26 0.10 3.24 0.16 0.31

1 g/t 1431 0.88 0.94 0.17 0.07 2.05 0.13 0.25

Inferred Mineral Resources

Contained Metal

Cut-off

3PE+Au

(Moz)

Moz)

(Moz)

3PE+Au

(Moz)

(Mlb)

3 g/t 13.8 14.0 2.3 1.0 31.0 865 1,736

2 g/t 23.2 23.8 4.3 1.6 52.8 1,775 3,440

1 g/t 40.4 43.0 7.8 3.1 94.3 4,129 7,759

1. Mineral Resources have an effective date of April 22, 2016. The Qualified Persons for the estimate are Dr.

Harry Parker, RM SME, and Mr. Timothy Kuhl, RM SME.

2. Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral

Reserves do not have demonstrated economic viability.

3. The 2 g/t 3PE+Au cut-off is considered the base-case estimate and is highlighted. The rows are not additive.

4. Mineral Resources are reported on a 100% basis. Mineral Resources are stated from approximately -200 m to

650 m elevation (from 500 m to 1,350 m depth). Indicated Mineral Resources are drilled on approximately 100

x 100 m spacing; Inferred Mineral Resources are drilled on 400 x 400 m (locally to 400 x 200 m and 200 x 200

m) spacing.

5. Reasonable prospects for eventual economic extraction were determined using the following assumptions.

Assumed commodity prices are Platinum: $1,600/oz; palladium: $815/oz; gold: $1,300/oz; rhodium: $1,500/oz;

copper: $3.00/lb; and nickel: $8.90/lb. It has been assumed that payable metals would be 82% from

smelter/refinery and that mining costs (average $34.27/t) and process, general and administrative costs, and

concentrate transport costs (average $15.83/t of mill feed for a four Mtpa operation) would be covered. The

processing recoveries vary with block grade but typically would be 80%-90% for platinum, palladium and

rhodium; 70-90% for gold; 60-90% for copper; and 65-75% for nickel.

6. 3PE+Au = platinum, palladium, rhodium and gold.

7. Totals may not sum due to rounding.

Platreef’s Shaft 1 at a depth of 950 metres below surface; shaft completion to final

depth of 1,000 metres expected by mid-2020

Good progress continues to be made on Shaft 1’s 950-metre-level station ─ the third and

final horizontal mining access station planned for Shaft 1 at the company’s Platreef

Project on the northern limb of the Bushveld Complex, adjacent to Anglo Platinum’s

Mogalakwena Mine.

Minor revisions to the 950-metre-level station layout have been made to accommodate

rock-handling arrangements to facilitate potential early development from Shaft 1.

Shaft 1 is expected to reach its projected, final depth of approximately 1,000 metres

below surface, complete with all access stations, by mid-2020. The mining zones in the

current Platreef Mine plan occur at depths ranging from approximately 700 metres to

1,200 metres below surface.

Ivanhoe Mines indirectly owns 64% of the Platreef Project through its subsidiary,

Ivanplats, and is directing all mine development work. The South African beneficiaries of

the approved broad-based, black economic empowerment structure have a 26% stake in

the Platreef Project. The remaining 10% is owned by a Japanese consortium of

ITOCHU Corporation; Japan Oil, Gas and Metals National Corporation; and Japan Gas

Corporation.

Moolmans (formerly Aveng) shaft-sinking miners drilling the brow for Shaft 1’s

950-metre station.

Jan Mapeka, one of Platreef’s geologists, ready to proceed underground to

conduct a borehole camera inspection of Shaft 1’s development.

Qualified person

The scientific and technical information in this news release has been reviewed and

approved by Stephen Torr, P.Geo., Ivanhoe Mines’ Vice President, Project Geology and

Evaluation, a Qualified Person under the terms of National Instrument (NI) 43-101. Mr.

Torr is not independent of Ivanhoe Mines. Mr. Torr has verified the technical data

disclosed in this news release.

Ivanhoe has prepared a current, independent, NI 43-101-compliant technical report for the

Platreef Project titled “The Platreef 2017 Feasibility Study Technical Report” dated

September 4, 2017, prepared by DRA Global, OreWin, Amec Foster Wheeler, Stantec

Consulting, Murray & Roberts Cementation, SRK Consulting, Golder Associates and

Digby Wells Environmental. Detailed information about assay methods and data

verification measures used to support the scientific and technical information is set out

in the Platreef Technical Report, which is available under Technical Reports at

www.ivanhoemines.com and on Ivanhoe Mines’ SEDAR profile at www.sedar.com.

About Ivanhoe Mines

Ivanhoe Mines is a Canadian mining company focused on advancing its three principal

projects in Southern Africa: the development of new mines at the Kamoa-Kakula copper

discovery in the Democratic Republic of Congo (DRC) and the Platreef palladium-

platinum-nickel-copper-gold discovery in South Africa; and the extensive redevelopment

and upgrading of the historic Kipushi zinc-copper-germanium-silver mine, also in the

DRC. The company also is exploring for new copper discoveries on its wholly-owned

Western Foreland exploration licences, adjacent to the Kamoa-Kakula mining licence.

Information contacts

Investors and Media

Bill Trenaman +1.604.331.9834

Cautionary statement on forward-looking information

Certain statements in this news release constitute “forward-looking statements” or “forward-looking

information” within the meaning of applicable securities laws. Such statements involve known and

unknown risks, uncertainties and other factors, which may cause actual results , performance or

achievements of the company, the Platreef Project, or industry results, to be materially different from any

future results, performance or achievements expressed or implied by such forward-looking statements or

information. Such statements can be identified by the use of words such as “may”, “would”, “could”, “will”,

“intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict” and other

similar terminology, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will”

be taken, occur or be achieved. These statements reflect the company’s current expectations regarding

future events, performance and results, and speak only as of the date of this news release.

The forward-looking statements and forward-looking information in this news release include without

limitation, (i) statements regarding the expectation that Shaft 1 will reach its projected, final depth of

approximately 1,000 metres below surface, complete with the stations, in mid-2020; (ii) statements

regarding Platreef is projected to have a cash cost of US$351 per ounce of 3PE+Au, net of nickel and

copper by-products, and including sustaining capital costs; (iii) and statements regarding Platreef’s initial,

average annual production rate will be approximately 219,000 ounces of palladium, 214,000 ounces of

platinum, 30,000 ounces of gold and 14,000 ounces of rhodium (combined 477,000 ounces of 3PE+Au),

plus 21 million pounds of nickel and 13 million pounds of copper.

Readers are cautioned that actual results may vary from those presented.

All such forward-looking information and statements are based on certain assumptions and analyses

made by Ivanhoe Mines’ management in light of their experience and perception of historical trends,

current conditions and expected future developments, as well as other factors management believe are

appropriate in the circumstances. These statements, however, are subject to a variety of risks and

uncertainties and other factors that could cause actual events or results to differ materially from those

projected in the forward-looking information or statements including, but not limited to, unexpected

changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties

to contracts to perform as agreed; social or labour unrest; changes in commodity prices; unexpected

failure or inadequacy of infrastructure, industrial accidents or machinery failure (including of shaft sinking

equipment), or delays in the development of infrastructure; and the failure of exploration programs or

other studies to deliver anticipated results or results that would justify and support continued studies,

development or operations. Other important factors that could cause actual results to differ from these

forward-looking statements also include those described under the heading “Risk Factors” in the

company’s most recently filed MD&A, as well as in the most recent Annual Information Form filed by

Ivanhoe Mines. Readers are cautioned not to place undue reliance on forward-looking information or

statements. Certain of the factors and assumptions used to develop the forward-looking information and

statements, and certain of the risks that could cause the actual results to differ materially are presented

in the “Platreef 2017 Feasibility Study, September 2017” available on SEDAR at www.sedar.com and on

the Ivanhoe Mines website at www.ivanhoemines.com.

Although the forward-looking statements contained in this news release are based upon what

management of the company believes are reasonable assumptions, the company cannot assure

investors that actual results will be consistent with these forward-looking statements. These forward-

looking statements are made as of the date of this news release and are expressly qualified in their

entirety by this cautionary statement. Subject to applicable securities laws, the company does not

assume any obligation to update or revise the forward-looking statements contained herein to reflect

events or circumstances occurring after the date of this news release.

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